Gold hits record high on global markets, rupee

Mumbai: India gold futures extended gains for a fourth session on Friday to hit a new peak following a rally in overseas markets and a weaker rupee, which traded at its lowest level in five weeks, pushing physical traders to the sidelines ahead of a slew of festivals starting later next week.

The most-active gold for October delivery on the Multi Commodity Exchange (MCX) struck a record of Rs 24,300 per 10 grams, before trading 0.75% higher at Rs 24,247.

Overseas gold edged up more than half a percent as investors used bullion to shelter from the storm engulfing financial markets on concerns that the United States may be facing another recession and Europe’s debt crisis is spreading to some of its largest economies.

The rupee slumped to stay around a 5-week low as local shares tumbled, tailing a global equity sell-off, stoking fears of foreign fund outflows on renewed risk aversion.

The rupee plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars.

Retail gold demand is expected to gain pace in August, when the festival and wedding seasons start in the world’s biggest consumer of bullion.

“I don’t think at this level demand will come in. It looks like the whole world is just trusting gold and nothing else. It is diffcult for people to digest new highs,” said Pinakin Vyas, assistant vice-president with IndusInd Bank in Mumbai.